DraftKings entered 2026 with the kind of earnings report investors have long been waiting for, signaling that years of aggressive expansion are beginning to translate into sustained profitability.
The Boston-based sportsbook and online gaming operator reported $1.65 billion in first-quarter revenue on Thursday, a 17% increase from the same period last year. Improved sportsbook margins and steady customer engagement helped the company post a $21 million profit, reversing a loss recorded a year earlier.
The results suggest DraftKings is moving beyond the costly customer-acquisition phase that defined the early years of legalized sports betting expansion across the United States. Company executives said the core sportsbook business is now generating enough cash flow to fund newer initiatives without undermining profitability.
We are off to a fantastic start to the year as our first quarter results exceeded our expectations,” Chief Executive Officer Jason Robins said in the company’s earnings release. “Our core business is strong, and profitability is inflecting. That gives us the firepower to press our advantage in Predictions.”
Prediction markets emerge as a major growth focus
Robins said prediction-based products are becoming an increasingly important part of DraftKings’ long-term strategy. The category allows users to trade on the outcomes of sports, political, and entertainment events and has gained traction across the broader online wagering industry.
According to Robins, DraftKings plans to combine sportsbook technology, exchange systems, and betting products to “establish a leadership position in Sports Predictions before year-end.”
The initiative aligns with the company’s broader ambition to create a “super app” ecosystem that integrates sports betting, online casino gaming, media, and predictive trading products within a single platform. Executives believe a wider digital entertainment ecosystem can increase customer engagement, boost spending, and reduce churn.
Growth shifts from customer acquisition to customer value
Despite strong revenue growth, DraftKings showed signs of relying less on rapid user acquisition and more on generating higher spending from existing customers.
Monthly unique payers declined year over year, largely due to the company’s 2025 exit from the Texas lottery business. Excluding that operation, customer growth remained modestly positive.
At the same time, average revenue per user increased significantly during the quarter as sportsbook margins improved and engagement across online casino and sports betting products remained strong. Sportsbook revenue also outpaced total betting handle growth, indicating the company retained more profit from wagers placed.
Investment spending remains elevated
DraftKings continues to invest aggressively in key strategic areas even as profitability improves. Sales and marketing expenses exceeded $400 million during the quarter, while spending on software development and legislative lobbying also remained elevated.
International expansion remains part of the company’s broader growth plans. DraftKings already operates in Ontario and could eventually benefit from Alberta’s decision to approve 28 operators ahead of launching a regulated online gambling market in Canada’s second-largest province.
Chief Financial Officer Alan Ellingson said the company believes it can continue balancing expansion with stronger earnings performance.
“The business continues to scale efficiently as we grow revenue, expand profitability, and invest in high-return opportunities,” Ellingson said.
Featured image: DraftKings
